Mining might be Australia’s current “golden-beacon” saving local industries from the “global economic turmoil”. However playing “schoolyard favourites” won’t work when it comes to the economy – and the affects of such a game could lead to detrimental affects.
Jac Nasser, head of mining giant BHP Billiton told media this week that while Australia is well placed to weather any new global economic turmoil, solely relying on the exports of natural resources could weaken Australia’s economic performance in the long-term.
While Australia can be confident about the strength of its natural resources industry, the failure to diversify beyond the sector has seen some areas of the economy flourish, such renewable energy, while others shrink significantly, such as manufacturing.
Nasser said that “taking a bet on one sector is not the answer. A better long-term strategy is to have a balance of manufacturing, resources and services,” in an AFP report.
Diversifying might be a clear and possible solution, however steps need to achieve this result might not be so simple for Australia’s minority coalition government who has to battle a range of economic reforms, including taxes on mining profits and pollution, not to mention an unyielding opposition.
The surge in the Australian dollar has also played a major part in the decline of Australia’s export-exposed sectors. A high Aussie dollar might have helped increase mining exports to Asia contributing to Australia’s terms of trade reaching 160-year highs, it has damaged local industries such as tourism, retail and manufacturing hard.